POST UTME AAUA 2018 Economics | Objective

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Question 1
Determine the equilibrium price and quantity of wheat in Nigeria, given the following demand and supply functions: Demand: Qd = 100 - 2P, Supply: Qs = 2P - 50. Assume the market is in equilibrium.
A. ₦50, 150 units
Correct B. ₦75, 100 units
C. ₦25, 200 units
D. ₦100, 50 units

Correct Answer: B

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Question 2
A firm producing wheat in Nigeria faces the following \cost functions: TC = 100 + 2Q + 0.1Q^2, TVC = 2Q + 0.1Q^2. Determine the marginal \cost (MC) and average \cost (AC) at Q = 50 units.
Correct A. MC = ₦5, AC = ₦6
B. MC = ₦6, AC = ₦7
C. MC = ₦7, AC = ₦8
D. MC = ₦8, AC = ₦9

Correct Answer: A

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Question 3
A consumer in Nigeria has the following utility function: U = 2x + 3y, where x and y are the quantities of two goods consumed. If the prices of the goods are ₦10 and ₦20 respectively, determine the consumer's budget constraint and the optimal quantities of the goods.
Correct A. x = 10, y = 5
B. x = 5, y = 10
C. x = 15, y = 3
D. x = 20, y = 2

Correct Answer: A

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Question 4
A firm in Nigeria is considering investing in a new project with the following cash flows: Year 1: ₦100,000, Year 2: ₦120,000, Year 3: ₦150,000. Determine the net present value (NPV) of the project u\sing a discount rate of 10%.
Correct A. ₦50,000
B. ₦60,000
C. ₦70,000
D. ₦80,000

Correct Answer: A

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Question 5
A government in Nigeria is considering implementing a policy to increase the production of wheat. Determine the effect of the policy on the equilibrium price and quantity of wheat in the market, assuming the demand and supply functions are: Demand: Qd = 100 - 2P, Supply: Qs = 2P - 50.
A. Price increases, quantity decreases
Correct B. Price decreases, quantity increases
C. Price remains the same, quantity increases
D. Price remains the same, quantity decreases

Correct Answer: B

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Question 6
Consider a production process where the marginal product of labor (MPL) is given by MPL = 10L - 2L^2, where L is the number of labor units. If the MPL is decrea\sing at a rate of 4 units when L = 4, what is the rate at which the total product (TP) is increa\sing?
Correct A. 12
B. 16
C. 20
D. 24

Correct Answer: A

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Question 7
A firm's demand function is given by Q = 100 - 2P + 3X, where Q is the quantity demanded, P is the price, and X is an exogenous variable. If the price elasticity of demand is -2 and X = 10, what is the rate of change of quantity demanded with respect to price?
A. -2
Correct B. -4
C. -6
D. -8

Correct Answer: B

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Question 8
A country's GDP is given by GDP = C + I + G + \( X - M \), where C is consumption, I is investment, G is government sp\ending, X is exports, and M is imports. If the country's GDP is $100 billion, consumption is $50 billion, investment is $20 billion, government sp\ending is $15 billion, exports are $30 billion, and imports are $20 billion, what is the country's trade balance?
Correct A. $10 billion
B. $5 billion
C. $0 billion
D. -$5 billion

Correct Answer: A

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Question 9
A central bank uses the following monetary policy rule: i = 2 + 0.5\( P - 2 \), where i is the interest rate and P is the inflation rate. If the inflation rate is 3%, what is the interest rate?
A. 4%
Correct B. 5%
C. 6%
D. 7%

Correct Answer: B

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Question 10
A government imposes a tax on a good, cau\sing the supply curve to shift to the left. If the original equilibrium price is $10 and the original equilibrium quantity is 100 units, and the tax causes the supply curve to shift to the left by 20 units, what is the new equilibrium price?
A. $8
Correct B. $9
C. $10
D. $11

Correct Answer: B

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Question 11
A monopolistically competitive firm faces a downward-sloping demand curve. If the firm increases its price, what will happen to its marginal revenue?
A. Increase
Correct B. Decrease
C. Remain the same
D. Become indeterminate

Correct Answer: B

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Question 12
A country's balance of payments account shows a trade deficit of $100 million. What is the likely effect on its exchange rate?
A. Appreciation
Correct B. Depreciation
C. No effect
D. Stagnation

Correct Answer: B

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Question 13
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm increases its labor input from 4 to 9, and holds capital cons\tant at 16, what is the percentage change in output?
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 14
A country imposes a tariff on imported goods. What is the likely effect on its terms of trade?
A. Improvement
Correct B. Deterioration
C. No effect
D. Stagnation

Correct Answer: B

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Question 15
A firm's demand curve is given by Q = 100 - 2P. If the firm increases its price from $10 to $15, what is the percentage change in quantity demanded?
A. -20%
Correct B. -30%
C. -40%
D. -50%

Correct Answer: B

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Question 16
The opportunity \cost of producing one more unit of a good is the value of the next best alternative that is given up. This concept is closely related to the law of increa\sing opportunity \cost. Which of the following best describes the law of increa\sing opportunity \cost?
A. As the quantity of a good increases, the opportunity \cost of producing one more unit decreases.
Correct B. As the quantity of a good increases, the opportunity \cost of producing one more unit increases.
C. The opportunity \cost of producing one more unit is cons\tant regardless of the quantity produced.
D. The opportunity \cost of producing one more unit is zero when the quantity produced is zero.

Correct Answer: B

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Question 17
A country's balance of payments (BOP) is a statistical statement that summarizes all economic transactions between residents and non-residents over a specific period. Which of the following is NOT a component of the BOP?
A. Current account
B. Capital account
C. Financial account
Correct D. Goods and services account

Correct Answer: D

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Question 18
A perfectly competitive market is characterized by a large number of firms producing a homogeneous product. Which of the following is a characteristic of a perfectly competitive market?
A. A \single firm produces the entire output of the market.
Correct B. A large number of firms produce a homogeneous product.
C. Firms have complete control over the market price.
D. Firms produce a differentiated product.

Correct Answer: B

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Question 19
The concept of scarcity is central to the study of economics. Which of the following best describes the concept of scarcity?
A. The unlimited availability of resources to meet unlimited wants.
B. The limited availability of resources to meet unlimited wants.
C. The unlimited availability of resources to meet limited wants.
Correct D. The limited availability of resources to meet limited wants.

Correct Answer: D

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Question 20
Gross Domestic Product (GDP) is a measure of the total value of all final goods and services produced within a country's borders over a specific period. Which of the following is NOT a component of GDP?
A. Consumption
B. Investment
C. Government sp\ending
Correct D. Imports

Correct Answer: D

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Question 21
Consider a firm operating in a perfectly competitive market with a production function Q = 2L^0.5K^0.5. If the firm's current input prices are w = 10 and r = 20, and the current output price is p = 50, calculate the firm's maximum profit.
Correct A. ₦1000
B. ₦1200
C. ₦1500
D. ₦1800

Correct Answer: A

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Question 22
A country's GDP is ₦100 billion, its imports are ₦20 billion, and its exports are ₦30 billion. Calculate the country's balance of trade.
A. ₦10 billion
Correct B. ₦20 billion
C. ₦30 billion
D. ₦40 billion

Correct Answer: B

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Question 23
A firm's demand function is Q = 100 - 2P, and its supply function is Q = 2P - 10. Find the equilibrium price and quantity.
A. P = 20, Q = 40
Correct B. P = 30, Q = 50
C. P = 40, Q = 60
D. P = 50, Q = 70

Correct Answer: B

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Question 24
A country's money supply is ₦50 billion, and its velocity of money is 2. If the country's GDP is ₦100 billion, calculate the country's inflation rate.
A. 10%
Correct B. 20%
C. 30%
D. 40%

Correct Answer: B

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Question 25
A firm's production function is Q = 2L^0.5K^0.5. If the firm's current input prices are w = 10 and r = 20, and the current output price is p = 50, calculate the firm's maximum profit.
Correct A. ₦1000
B. ₦1200
C. ₦1500
D. ₦1800

Correct Answer: A

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